Exploring Production and Trade

2. Suppose the two countries of Purland and Rurland produce
only two commodities and the amounts that they can produce are
shown in the production-possibilities table below. Each table has
one entry missing. What is the missing entry assuming that the
opportunity costs of Chocolate and Textiles are constant? Fill in
the blanks and then answer the remaining questions. When you are
finished, click the "Check Answers" buttons and see how you
did.

Purland

Rurland

Without trade, the best each country could do would be:

Chocolate

Textiles

. . .

Chocolate

Textiles

30

0

. . .

60

0

20

20

. . .

40

15

30

. . .

30

15

10

. . .

20

20

0

60

. . .

0

30

If we unite these two countries and find their merged production-possibilities frontier, what do we get? Complete the combined production-possibilities table below.

Chocolate

Textiles

If they specialized and traded, each country could
have which of the following bundles?

90

0

80

70

60

40

20

0

90

3. Jack can fetch 4 pails of water an hour or pick four pecks of
peppers. Jill can fetch 2 pails of water an hour or pick three pecks
of peppers. Each works alone for four hours. Derive their
production-possibilities frontiers:

Jack

Jill

Water

Peppers

Water

Peppers

16

__

__

__

__

__

__

__

__

__

__

__

__

__

__

__

0

__

__

__

Jack wants to consume four pails of water every four hours. How many
peppers can he consume? Jill also wants four pails of water every
four hours. How many peppers can she consume? Explain how they can
specialize (only partially for one of them) and trade and both be
better off.
Are they equally well off before trade? Are they equally well off
after trade? Do the rich get richer and the poor get poorer, or do
both the rich and the poor get richer?
Reflect on the implications of this example and the notion of
comparative advantage. Does they say that only the best and brightest
are useful in society, or that even people who are not very
productive can be useful parts of society?